Correlation Between Telenor ASA and SK Telecom
Can any of the company-specific risk be diversified away by investing in both Telenor ASA and SK Telecom at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Telenor ASA and SK Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telenor ASA and SK Telecom Co, you can compare the effects of market volatilities on Telenor ASA and SK Telecom and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Telenor ASA with a short position of SK Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telenor ASA and SK Telecom.
Diversification Opportunities for Telenor ASA and SK Telecom
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Telenor and SKM is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Telenor ASA and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom and Telenor ASA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Telenor ASA are associated (or correlated) with SK Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Telecom has no effect on the direction of Telenor ASA i.e., Telenor ASA and SK Telecom go up and down completely randomly.
Pair Corralation between Telenor ASA and SK Telecom
Assuming the 90 days horizon Telenor ASA is expected to under-perform the SK Telecom. But the pink sheet apears to be less risky and, when comparing its historical volatility, Telenor ASA is 1.11 times less risky than SK Telecom. The pink sheet trades about -0.21 of its potential returns per unit of risk. The SK Telecom Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,279 in SK Telecom Co on August 31, 2024 and sell it today you would earn a total of 148.00 from holding SK Telecom Co or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telenor ASA vs. SK Telecom Co
Performance |
| Timeline |
| Telenor ASA |
| SK Telecom |
Telenor ASA and SK Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telenor ASA and SK Telecom
The main advantage of trading using opposite Telenor ASA and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telenor ASA position performs unexpectedly, SK Telecom can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SK Telecom will offset losses from the drop in SK Telecom's long position.| Telenor ASA vs. Orange SA ADR | Telenor ASA vs. ATT Inc | Telenor ASA vs. Verizon Communications | Telenor ASA vs. MTN Group Ltd |
| SK Telecom vs. RLJ Lodging Trust | SK Telecom vs. Aquagold International | SK Telecom vs. Stepstone Group | SK Telecom vs. Morningstar Unconstrained Allocation |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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